OREANDA-NEWS. January 11, 2008. Donetskkoks OJSC has stopped its two coke-oven batteries of Rutchenkovskiy section, UFC-Capital's press service reported.The decision was taken based on the technical audit of the company’s production capacities. The experts warned the company management that the high deterioration of the batteries, especially in the conditions of winter cold, may result in an emergency shutdown of the plant. Another still higher risk factor is the irregular supply of coking coal. The company operates at the minimum admissible level of production. In December 2007, Donetskkoks referred to the coal producers, specifically, to Coal of Ukraine state owned company, Makeevugol, Dzerzhinskugol and Artemovskugol asking to ensure the guaranteed supply of coal, however, the company got refusals.

Before 2005, the largest client of Donetskkoks was Mariupol Illich Iron and Steel, which possesses no coke production of its own, but its annual need in coke amounts to 2.5-3 mn tonnes. Traditionally, Mariupol Illich purchased from Donetskkoks up to 50% of its product (700-800 thousand tonnes). The company also supplied its coke to Krivoy Rog Iron and Steel and Zaporozhsteel. However, Zaporozhsteel has almost completely reoriented itself to Zaporozhkoks, and Krivoy Rog Iron and Steel after being purchased by Acerol Mittal, stopped their purchases from Donetskkoks in 2006. From 2006, Mariupol Illich Iron and Steel also reduced its purchase volumes. And when the Antimonopoly Committee permitted to Vladimir Boiko, a co-owner of Mariupol Illich Iron and Steel, to take on lease the capacities at Yasinovka Coke, this put an end to the perspectives of Donetskkoks.
As the factory, which possesses no raw materials base of its own and experiences serious difficulties with sales of its products, Donetskkoks was doomed.

So, in early August 2006, one in three factory sections – Smolianinovkiy – was closed, soon after that there started circulating the rumors that the second and the major section – Rutchenkovskiy would be liquidated. In autumn 2006, the plans commenced to materialize – the coke-oven battery #4 at Rutchenkovskiy section was shut down. In early 2007, Donetskkoks stopped its coke-oven battery #3 at Rutchenkovskiy section, which output amounted to 300 thousand tonnes per year. The fact that Metinvest is not going to treat this asset seriously is also indirectly confirmed by that Donetskkoks was not included into its coal and coke division. Moreover, the holding owned by Akhmetov tried to distance itself from this scandalous enterprise by constantly saying that SCM is just one of its minority shareholders (24.5% interest) and even does not participate in Donetskkoks management. Besides, the shareholders of the company also include: Medco Services Ltd. (British Virgin Islands) — 15.087%, Ultima Trading Group Inc . (the USA) — 16.042%, Investments and Development LLC (ex-ARS) — 23.835%, and Illich Steel CJSC — 12.956%. The offshore companies – Ultima Trading Group Inc. and Medco Services Ltd. – are controlled by System Capital Management CJSC, which is evidenced at least by the fact that these two companies for more than once issued loans to Shakhter FK, the beloved brainchild of Rinat Akhmetov. It is unlikely that somebody else’s offshore companies would lend money to the loss-making company like FK. The well-informed sources say that SCM is trying to distance itself from Donetskkoks due to the potential problems with the Antimonopoly Committee. Although, taking into account the situation with Ingulets Mining purchase and “wonderful" story by the Antimonopoly Committee about Kursk magnetic anomaly (which in fact is in Russia), Mr Akhmetov has nothing to worry about.

The statutory fund of Donetskkoks is UAH 62.271 mn, a share face value is UAH 0.25. In 2006, the company’s output of its main product – bulk coke with 6% moisture content — 630,305 tonnes; metallurgical coke — 543,879 tonnes. The net profit of the company in 2006 amounted to UAH 6.28 mn.